DOJ, US Airways and AMR Corp. in settlement discussions over airline merger

Back in August 2013, when the Department of Justice (DOJ) filed an antitrust suit to block the merger of US Airways Group Inc. and AMR Corp., American Airlines’ parent company, U.S. Attorney General Eric Holder said, “By challenging this merger, the Department of Justice is saying that the American people deserve better.”

Well, “better” may be on the way sooner rather than later. Following an Oct. 28 agreement between the airlines and the DOJ to mediate the case, the two sides have now begun exploratory talks to settle the suit outright.

According to sources for Bloomberg, the two sides have begun talks to settle the suit, with the two airlines making concessions as part of the settlement. The airlines have offered to divest gates and landing and takeoff rights at Washington D.C.’s Reagan National Airport through the terms of the agreement, the sources said.

Reagan National Airport in particular was a major source of concern for the DOJ, as government officials wrote in an amended complaint once the state of Michigan joined the suit, “The merger would eliminate head-to-head competition in hundreds of relevant markets and entrench US Airways’ dominance at Reagan National Airport.”

U.S. District Judge Colleen Kollar-Kotelly, who is overseeing the case, suggested mediation to the two sides to reach a quick resolution, which the airlines had previously requested due to AMR Corp.’s ongoing bankruptcy struggles. If the two sides cannot reach a settlement agreement, a trial is currently set to begin on Nov. 25.

Attorneys for both sides refused to comment on the ongoing settlement talks. But Rich Parker, an attorney for US Airways, told reporters outside federal court yesterday, “We have always said that our side is open to discussions but I’m not going to talk about any aspect of settlement,” Parker said. He said Kollar-Kotelly “asked for a mediator. When the judge asks us to do that, we do that.”

InsideCounsel has been on the US Airways-American Airlines merger from the beginning. For past coverage, see: